Obama policies could stifle Md.'s biotech industry

Scott Eldridge

The Food and Drug Administration's plans to streamline the approval process for "breakthrough" drugs that treat life-threatening diseases is great news for patients and has enormous potential for our pharmaceutical industry, already in the midst of an innovation explosion.

Unfortunately, in the middle of all this progress, political leaders in Washington are pushing proposals that would severely undermine innovation and deliver a crippling blow to Maryland's biotech industry. Lawmakers must understand that without a favorable policy environment, innovation can grind to a halt.

As the understanding of diseases has vastly expanded, so too has our ability to manage, treat and cure them. Biotech firms are producing hundreds of groundbreaking treatments for cancers, infectious diseases, spinal injuries and many other deadly and debilitating ailments.

More than 5,400 additional medications are in the development pipeline. Nearly three quarters of them are potential "first in class" drugs — medications that offer entirely new lines of treatment for patients.

Today, there are 907 biologic medicines either in their final testing stages or being reviewed by the FDA for final approval. More than 330 of these target deadly cancers, and 176 focus on infectious diseases. Others target ailments such as blood disorders, eye conditions and autoimmune illnesses.

This renaissance in innovation stems from our newfound ability to derive medications from living cells or organisms. The treatment for melanoma, for example, uses a genetically modified virus-based vaccine that stimulates a person's own immune system to destroy the cancer cells.

Many of these breakthroughs are happening in Maryland, which is home to 500 biotech and biopharma companies, 45 of which are conducting more than 150 clinical trials, according to the state's Biotechnology Center. The industry accounts for more than 70,000 jobs in the state and a third of all the jobs gained over the past decade.

But these breakthroughs don't come easy, nor are they cheap. Of the 5,000-10,000 compounds initially screened, just five will eventually enter human clinical trials, and of those, only one will eventually win FDA approval — a process that typically stretches over 10 to 15 years and costs more than $1.2 billion per approved drug.

Unfortunately, the Obama Administration and some lawmakers are pushing for policies that could stifle innovation. One proposal would impose price controls on the Medicare Part D prescription drug program, and the other would shorten the amount of time innovative companies have to potentially recoup the enormous investments made in discovering new treatments.

Unlike most other federally administered health programs, Part D relies on market competition

, a policy that has been overwhelmingly successful. The program is on a track to cost 45 percent less than forecast over its first 10 years, and a government commission recently reported 94 percent of enrollees are satisfied. Yet President Barack Obama is now pushing for a system of price controls that would require pharmaceutical companies to pay "rebates" on drugs sold to low-income seniors.

The problem is what these price controls could do to incentives for innovation. With even more uncertain prospects for the risky process of biopharmaceutical development, the industry could turn away from making new investments in tomorrow's cures.

The nonpartisan Congressional Budget Office has noted that imposing such rebates on the Part D program would "reduce manufacturers' incentives to invest in R&D on products that would be expected to have significant Medicare sales." This could stifle potential breakthrough discoveries to treat Parkinson's, arthritis, osteoporosis and other diseases that disproportionately affect the elderly.

Meanwhile, the administration is pushing to loosen protections for biotech firms' intellectual property. These changes would shorten from 12 years down to just seven the protection drug companies receive for new biologic medicines. Allowing competing biologics to enter the market earlier would make the biotech industry much less attractive to investors and could potentially reduce the number of new medicines in development.

When an industry is about to unleash a wave of life-saving innovations, you'd think politicians would work to encourage it. Instead, some politicians seem content to let this latest wave of innovation be our last.

Scott Eldridge is responsible for business development in Maryland and other Northeastern states for Global Pharma Analytics, Inc., a contract analytical chemistry laboratory based in Jupiter, Fla.